When Government Attempts to Reduce Climate Change by Establishing a Minimum

question 166

Multiple Choice

When government attempts to reduce climate change by establishing a minimum level of fuel efficiency on new cars, it is using a(n) :

• A) environmental standard.
• B) emissions tax.
• C) Pigouvian tax.
• D) tradable emissions permit.

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Definitions:

Competitive Industry

A market scenario where multiple firms produce similar products, leading to high levels of competition.

Short-Run Industry Supply

The total quantity of goods that firms in a particular industry are willing and able to sell at different prices in a short period, with some factors held constant.

Total Cost Function

The total cost function is a mathematical representation that shows how total costs of production vary with changes in output level.

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.